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Canadian Pacific Railway under pressure for 2013 delays

GRAND FORKS, ND – With pressure already on BNSF Railway to put a stop to delays of grain shipments in North Dakota, attention now shifts to Canadian Pacific Railway.

U.S. Sen. Heidi Heitkamp, D-N.D., sent a letter last week to CP urging the company to release more information on the delays in 2013, along with its plan to meet harvest demands this year.

“I will tell you that we also have had a lot of conversations with the Surface Transportation Board,” she said recently, referring to the regulatory body that oversees railroads. “We’ve had extensive, direct conversations about what’s out there and what needs to be moved, but we haven’t had that level of detail with CP.”

Concerns with CP are heightened now because BNSF has “been to the table and looking for solutions” but CP doesn’t “even appear to be talking about what they’re going to do. They just seem like they’re totally ignoring the issue,” said Mark Watne, president of the North Dakota Farmers Union.

Recent studies show shipment delays, blamed variously on railroads favoring crude oil customers and the high demand for rail transportation, have cost North Dakota and Minnesota farmers tens of millions of dollars in lost sales.

CP spokesman Ed Greenberg said the railway “is taking the concerns raised by Sen. Heitkamp very seriously, and our grain team is in the process of putting a response together. North Dakota business is very important to this railroad.”

Both BNSF and CP have rail lines that go through North Dakota and northwest Minnesota and have access to Pacific and Great Lakes ports. However, CP also has access to East Coast ports while BNSF has access to ports on the Gulf of Mexico.

Costly delays

According to a North Dakota State University study, shipment delays cost North Dakota farmers $66.6 million in lost grain sales. A University of Minnesota study found delays cost corn, soybean and wheat farmers in Minnesota nearly $100 million.

Heitkamp said she guesses that when NDSU conducts the study a second time, researchers will find North Dakota farmers’ losses to be closer to $100 million as well.

She said she has been working with railroads for months to push them to get as much of the 2013 crop out of elevators before the 2014 crop comes in.

“We are quite a ways behind in shipping last year’s crop. It’s been keeping elevators full or close to full,” Watne said. “What this (letter to CP) will do is force us to make some decisions on if the farmers should pile grain on the ground or leave things in the field longer.”

Each year, farmers are given a delivery window in their contracts, during which they need to buy access to trains, he said. If the crops aren’t delivered within that window, farmers have to pay, he said. “They usually pay fines and fees against the market or they go into secondary markets to try and buy cars.”

With a great demand for rail use, Watne said prices per bushel of grain range anywhere from 30 cents to a dollar more than usual.

“This is the first time (the delays have) been this bad,” said David Fiebiger, president of the North Dakota Grain Dealers Association. “(We are) 5,000 to 10,000 cars behind and an average of 30 days late. We’ve had problems before but never has it been this bad.”

No other way

Currently, railways are the best way for oil companies to cope with the limited capacity of pipelines to get their products to refineries. Railways are the best way for farmers, too.

Railways are “the most convenient way to move a large volume at one time, which is why the rails are so congested,” Fiebiger said. “If oil was shipped in semi trucks, it would take many more semis than it would rail cars.”

“They have us captive, we have no other way to do it,” said Watne, who feels oil shipment is being prioritized over agricultural shipment. “What would be wrong with having some oil trains delayed too? I struggle with that.”

According to Greenberg, the CP spokesman, the main cause of shipment delays for his company was not oil trains but bad weather and railway congestion in Chicago and St. Paul.

Hope for change

There are a few ways farmers and other officials feel the congestion problem can be solved, such as building infrastructure, buying more locomotives, increasing speed and power, hiring more people and purchasing more railcars.

“Burlington Northern is talking about spending $600 million in North Dakota alone and hiring 5,000 new crew members to their labor force. (They are also) ordering additional locomotives,” Fiebiger said. “CP hasn’t been as forthcoming with that information.”

Greenberg said, “This is an ongoing process that our railroad is committed to and working closely with customers and other stakeholders in this process to move our customers’ grain.”

Fiebiger said a solution will come from a collaborative effort.

“It’s not as simple as pointing at the railroad and saying you’re causing this problem,” Fiebiger said. “A solution to this will take effort by the railroads, the farming community and the elevators. We all have to deal with it, so we all have to work together.”

Still, as harvest gets closer, he said farmers are probably making alternate plans.

“I think that right now what everyone is doing is planning for the worst and hoping for the best,” he said. “I don’t think anyone is sitting out there without a Plan B. Well, I hope no one is out there without a Plan B.”